Suraksha Diagnostic Ltd Management Discussions

The global economys strength and adaptability came to the fore in CY 2024. Despite macroeconomic turbulence, the global economy achieved a growth rate of 3.30%.

Economic Overview

Global Economy¹

Advanced economies, faced notable headwinds, including weaker industrial output and tighter fiscal conditions, resulting in a growth rate of 1.80%, while Emerging Markets and Developing Economies (EMDEs) continued to be the primary engines of global expansion, supported by robust local demand and a steady inflow of foreign investments, showcasing a growth rate of 4.30% in CY 2024.

Global inflationary pressures eased in CY 2024, with inflation declining to an estimated 5.70% driven primarily by the stabilisation of energy and food prices, along with a gradual improvement in global supply chains. In response, central banks across major economies began shifting from a stance of monetary tightening to more accommodative policies. The US Federal Reserve, initiated rate cuts in late 2024, signalling a broader transition toward policies aimed at stimulating growth. These measures contributed to a gradual recovery in business confidence, improved credit availability and a moderate rebound in consumer spending across various markets. Trade tensions however, remain a concern, particularly in light of recently imposed tariffs by the US and other geopolitical developments that continue to pose risks to the stability of international trade.

Outlook

Looking ahead, the global economic outlook for CY 2025 and beyond is expected to remain moderate, though cautious optimism prevails. Global growth is projected at 2.80% for CY 2025 and 3.00% for CY 2026. This growth is envisioned to be supported by a more stable macroeconomic environment, recovery in investment activity and continued structural reforms across major economies. Growth in advanced economies is expected to remain moderate, while EMDEs are forecasted to sustain their growth momentum. EDMEs are likely to benefit from demographic advantages, ongoing infrastructure development and accelerating digital transformation.

Inflation is projected to sustain its downward trajectory, with global inflation expected to ease to 4.30% in CY 2025 and 3.60% in CY 2026. The decline in inflation, combined with improved liquidity and greater fiscal flexibility, is expected to result in a favourable investment climate. With business sentiment gradually improving, global economic conditions are expected to support steady, broad-based growth in the medium term.

Indian Economy

The economy of India projected stable growth in CY 2025 amid a complex global economic backdrop. The country registered a GDP growth of 6.50%². This growth is propelled by robust domestic demand, sustained government capital expenditure and healthy momentum across the construction, services, manufacturing and trade sectors. Inflationary pressures eased significantly over the year, with consumer price inflation declining to a five year low of 3.34% in March 2025. This moderation, largely driven by lower food prices, enabled the Reserve Bank of India (RBI) to shift to a more accommodative monetary policy stance. The supportive stance of the RBI helped in enhancing liquidity and stimulating consumption and investment.

The union budget allocation of H 11.11 lakh crore towards capital expenditure highlighted the Governments resolute commitment towards infrastructure led growth. The healthcare sector emerged as a vital contributor to the broader economy, benefitting from increased public and private investments. With the Government prioritising healthcare infrastructure and the private sector focusing on medical innovation and accessibility, this sector continues to play an increasingly important role in driving economic resilience and inclusive development.

Outlook

Indias economic outlook remains positive. This is backed by strong macroeconomic fundamentals and stable policy frameworks. The economy is expected to sustain its growth momentum, with GDP projected to remain steady at 6.50% in FY 2025-26³. This growth is expected to be driven by continued resilience in domestic demand, robust infrastructure spending and a revival in private sector investments.

Inflation is projected to remain within a manageable range of 4.00% to 4.20%, closely aligned with the RBIs target. In addition, the RBI has implemented consecutive cuts in the repo rate in order to enhance liquidity and credit flow in the economy. This is expected to augment overall economic activity and enhance business sentiments. Further, the government is maintaining a watchful stance on the evolving tariff landscape and is in the process of calibrating a response. The sustained moderation in inflation creates room for further monetary easing, which could support greater credit expansion and spur consumer spending across sectors.

Industry Overview

Global diagnostics industry⁴

The global diagnostics industry constitutes a fundamental component of the modern healthcare ecosystem, providing critical services that span across pathology to imaging technologies. As healthcare systems globally undergo a transition from reactive, treatment-centric models to preventive care, diagnostics are increasingly becoming central to this shift. In CY 2024, the global clinical diagnostics market was valued at USD 86.72 billion. This growth is supported by heightened health awareness, an increasing prevalence of chronic diseases and sustained innovation.

Outlook⁵

The global diagnostics industry is poised for robust growth, driven by increasing demand for accurate, early-stage disease detection and continued technological innovation. These advancements are significantly expanding both the capabilities and accessibility of diagnostic services across geographies. The global clinical diagnostics market is projected to reach approximately USD 140.53 billion by CY 2033, registering a CAGR of 5.51% over the forecast period. This positive outlook is further supported by shifts in healthcare trends, with populations increasingly prioritising proactive health management and personalised medicine.

Indian diagnostics industry⁶

The Indian diagnostic industry is crucial for the countrys healthcare landscape, enabling early disease detection, accurate diagnosis and informed treatment planning. Despite its essential role, the industry remains largely fragmented, with a significant portion of market share held by standalone diagnostic centres and hospital-based laboratories.

Relatively low barriers to entry, coupled with a less stringent regulatory environment, have facilitated the proliferation of unorganised players in the sector. While this has supported market expansion in terms of reach and accessibility, these unorganised entities often face challenges such as operational inefficiencies, limited scalability and inconsistencies in quality. These limitations impede their ability to offer specialised and high-end diagnostic services.

In contrast, organised diagnostic chains have steadily increased their market share by delivering reliable and standardised services at scale. These players benefit from robust financial and operational capabilities, better access to advanced diagnostic technologies and established quality protocols. As a result, they are well positioned to cater to the growing demand. Consumers are increasingly opting for organised networks due to their wider test offerings, quicker turnaround times and consistent quality standards.

Indias diagnostics sector remains underpenetrated relative to global benchmarks, with the number of diagnostic tests conducted per capita significantly lower than that of other developing economies. This indicates considerable untapped potential. Given the countrys large and expanding population, rising incidence of both communicable and non-communicable diseases and a growing shift in consumer behaviour toward preventive care, the industry is poised for robust expansion.

Outlook⁷

The Indian diagnostics industry is projected to grow at a healthy CAGR of 10–12% between FY 2025 and FY 2029, reaching a market size of H 1,275-H1,375 billion. This growth is expected to be driven by rising health awareness, increasing disposable incomes and a growing burden of lifestyle-related and chronic diseases. The governments focus on strengthening healthcare infrastructure, combined with rapid urbanisation and a shift towards preventive healthcare, is expected to provide impetus to industry expansion. Increased adoption of evidence-based treatment, expansion of organised healthcare delivery and deeper integration of digital technologies, such as artificial intelligence, telemedicine and remote diagnostics are poised to transform the sector. The industry is also expected to benefit from an increasing shift in consumer preferences toward wellness, early detection and preventive care.

Indian Diagnostics Industry Growth Projection

Emerging Trends in the Diagnostics Industry

Integrated offerings

An emerging trend in the diagnostic sector is the strategic integration of pathology and radiology services. This enables providers to deliver comprehensive, end-to-end diagnostic solutions that align with the evolving needs of patients and healthcare professionals. Integration enhances diagnostic accuracy, shortens turnaround times and improves patient convenience.

Digital and technology transformation in the industry

The industry is experiencing accelerated digital adoption across operational and customer-facing functions. Increasing competition has encouraged diagnostic service providers to innovate and differentiate through digital channels. Key initiatives include the expansion of home sample collection services, deployment of point-of-care testing solutions and investment in advanced IT infrastructure to enhance service accessibility and operational efficiency. Leading companies are also leveraging data analytics and digital marketing tools to enable informed decision making, deliver personalised customer experiences and strengthen long-term customer engagement and loyalty.

Sustainable practices

Given the healthcare sectors substantial environmental footprint and high water consumption, the diagnostics industry is increasingly adopting sustainable practices. There is a growing emphasis on reducing single-use plastics, reducing water consumption and transitioning to eco-friendly alternatives such as recyclable materials. These initiatives reflect the industrys commitment to environmental responsibility and align with the broader global push toward sustainability in healthcare.

Research and development (R&D) in diagnostic

R&D continues to play a critical role in the diagnostics sectors evolution. As the healthcare model transitions from reactive treatment to preventive care and wellness, diagnostics companies are increasingly investing in advanced technologies such as genome sequencing, point-of-care diagnostics, telemedicine and remote testing. These innovations aim to enhance diagnostic accuracy, improve accessibility in underserved regions and enable earlier detection.

Challenges in the Diagnostics Industry

Shortage of skilled professionals

The shortage of trained diagnostic professionals remains a key concern for the industry. There is a notable shortage of qualified full-time doctors, pathologists and laboratory technicians, which has exacerbated the challenge of maintaining consistent quality. This also underscores the importance of employee training and retention strategies across the sector. The issue is particularly pronounced among standalone diagnostic centres, which often struggle to attract and retain experienced professionals, potentially affecting the quality and accuracy of diagnostic outcomes.

Steep discounts by online players

The emergence of digital-first diagnostic platforms offering great discounts has introduced significant pricing pressure. While these models have improved consumer access, they have also disrupted market dynamics by driving price erosion and compressing margins for traditional diagnostic players. Established brick-and-mortar centres are particularly vulnerable, as they typically operate with higher fixed costs and a greater emphasis on quality infrastructure.

Limited infrastructure

Limited diagnostic infrastructure, especially in semi-urban and rural regions, continues to constrain the industrys ability to provide accessible and high-quality services. The absence of adequate facilities, modern equipment and streamlined operational processes hamper efforts to expand into underserved areas. These limitations not only restrict diagnostic penetration but also affect the consistency and reliability of services provided.

SWOT Analysis

S Strengths

Well positioned diagnostic chain: The Company has built a strong presence across Eastern and North-Eastern India, particularly in West Bengal, Bihar, Assam and Meghalaya. With a focus on quality, reliability and accessibility, the Company is well-positioned to expand further in high demand markets.

Technologically advanced clinical infrastructure and trained personnel: The Company leverages advanced clinical infrastructure and trained personnel to deliver high quality, reliable diagnostic services. Its adoption of state-of-the-art technology enhances accuracy, reduces errors and improves efficiency across locations, reinforcing its position as a leading technology driven diagnostic service provider in its region.

Management team with relevant industry experience: The Company benefits from a seasoned management team with deep healthcare expertise. Their leadership has driven consistent growth, improved efficiency and positioned the Company to adapt to industry changes, sustaining its competitive edge in the evolving Indian diagnostic market.

Commitment to quality: Over three decades, the Company has built a trusted brand known for consistent, high quality diagnostic services. Its commitment to excellence has earned multiple industry awards, recognising its reliability, diagnostic quality and leadership within the healthcare sector.

W Weakness

Geographical concentration: The Company remains heavily reliant on West Bengal for its revenue. This geographic concentration increases vulnerability to regional disruptions, policy changes, or intensified competition, which could significantly affect the Companys overall performance and growth potential.

Low contribution from consultation services: Although the Company has a large network of over 750+ doctors, consultation services contribute only 3.70% of revenue. This indicates a significant under utilisation of available medical expertise and a missed opportunity to expand service offerings and revenue streams.

O Opportunities

Geographic expansion: There is significant potential to expand beyond Eastern India by entering underserved Tier 2 and Tier 3 cities in nearby states. These markets offer untapped demand for quality diagnostic services and present a viable path for sustained growth.

B2B segment growth: With the B2B segment currently contributing only 6.52% of revenue, there is substantial room for expansion through increased partnerships with hospitals, corporates and healthcare providers. Strengthening this segment can help stabilise revenue and diversify the customer base.

Growing demand for preventive healthcare: Rising awareness around early disease detection and wellness testing is driving demand for preventive diagnostics. Services like routine blood tests, cancer screenings and genetic testing are gaining traction, supported by government and insurer initiatives to lower long-term healthcare costs.

Leveraging omni channel platforms: By scaling omni-channel platforms and introducing online consultations, the Company can enhance patient access, streamline service delivery and open new revenue channels. Embracing digital health tools aligns with consumer expectations and broadens the Companys service reach beyond physical locations.

T Threats

Intense competition: The diagnostic sector is witnessing heightened competition, with national chains and digital-first health tech start-ups rapidly expanding into regional markets. This intensifying rivalry could pressure margins, impact market share and challenge customer retention in core geographies.

Technological obsolescence: Rapid advancements in diagnostic technology, especially in radiology and molecular testing, require continuous investment in equipment upgrades. Failure to keep pace may affect service quality, while frequent capital expenditure could strain financial resources and impact profitability.

Cybersecurity and data privacy: With increasing reliance on cloud based lab information systems, the risk of data breaches and ransomware attacks remains high. Any compromise in patient data security could disrupt operations, invite regulatory scrutiny and significantly damage the Companys credibility and trust.

Strategies to drive future growth

Consolidating position in core geography

The Company aims to strengthen its foothold in existing markets by establishing additional diagnostic centres and increasing franchisee partnerships with local entrepreneurs. The Company also plans to enhance laboratory capacity and expand its test menu through the integration of cutting-edge technologies. Additionally, the Company will develop new hubs to create additional clusters, while simultaneously strengthening existing ones with spoke centres. This expansion will enhance operational efficiency, reduce turnaround times and ensure greater consistency in service delivery.

Expanding to adjacent geographies

The Company intends to expand into key regions across Eastern and North-Eastern India, targeting areas exhibiting rising demand for high-quality healthcare services. The Company will replicate its proven hub-and-spoke model in these geographies, which will enable it to achieve economies of scale. The Company will also implement its polyclinic model to attract greater patient footfall, broaden service accessibility and enhance operational effectiveness, thereby positioning itself to capture a larger share of these adjacent markets.

Supplementing organic with inorganic growth

The Company seeks to complement its organic growth through selective acquisitions and strategic partnerships with established diagnostic centres across Eastern and North-Eastern India and abroad. The Company will evaluate potential acquisition targets based on key criteria, such as brand recognition, customer base and technical capabilities. These strategic acquisitions will enable the Company to expand its reach, enrich its service portfolio and seamlessly integrate well-established local players into its growing network, accelerating it growth in new markets.

Leveraging technology

The Company plans to integrate advanced digital technologies, including Artificial Intelligence (AI) and Machine Learning (ML) to deliver a seamless, convenient and future-ready healthcare experience. The Company will strengthen customer engagement by expanding digital touchpoints for appointment scheduling, report access and secure online payments. By utilising AI and ML, the Company aims to enhance diagnostic precision, offer personalised healthcare solutions and optimise internal workflows, thereby improving patient satisfaction, operational efficiency and business growth.

Engagement in B2B and corporate partnerships

The Company aims to strengthen its B2B segment by forging strategic corporate partnerships to diversify its revenue streams. The Company will actively pursue institutional clients, leveraging referral networks and lead generation strategies to secure long-term diagnostic service contracts. Through these partnerships, the Company seeks to expand its customer base, increase brand visibility and drive consistent, high-volume business, ultimately boosting revenue and strengthening its position in the healthcare diagnostics sector.

Financial Performance

Financial Review

Particulars	FY 2024-25	FY 2023-24	FY 2022-23
Revenue growth	14.44%	15.03%	(14.81)%
EBITDA growth	15.58%	55.05%	(27.24)%
PAT growth	33.95%	281.32%	(70.87)%

Financial Ratios

Particulars	FY 2025	FY 2024	% Change
Current Ratio	1.16	1.80	(35.76)
Debt-Equity Ratio	0.41	0.50	(17.09)
Debt Service Coverage Ratio	3.27	2.58	26.63
Return on Equity Ratio	17%	14%	17.12
Inventory Turnover Ratio	3.95	4.27	(7.66)
Trade Receivables Turnover Ratio	20.58	31.58	(34.84)
Trade Payables Turnover Ratio	2.14	1.97	8.00
Net Capital Turnover Ratio	41.11	6.93	493.13
Net Profit Ratio	13.42%	11.16%	20.31
Return on Capital Employed	17.23%	15.29%	12.68
Return on Investment	8.38%	6.45%	29.99

Human Resource

Suraksha Diagnostics recognises that its people are integral to delivering quality diagnostic services and sustaining long-term growth. The Company has established robust recruitment policies, shaped by years of operational experience to attract and retain professionals who align with its values and commitment to excellence. Its structured hiring process, spanning targeted outreach, personal interviews, assessments and final selection ensures the recruitment of suitable candidates across all positions. The Company adopts a balanced recruitment strategy, drawing from both internal talent pool and external candidates to cultivate a skilled and agile workforce.

Continuous learning and development lie at the core of the employee experience at the Company. A dedicated Learning and Development (L&D) team is responsible for designing and implementing training initiatives across the organisation. These encompass comprehensive induction programmes, role-specific onboarding, hands-on learning and periodic upskilling sessions. Tailored developmental training is also offered based on individual feedback and performance insights provided by the HR team.

Safety remains a top priority, with mandatory training sessions conducted regularly to reinforce operational protocols and ensure the well-being of staff. Training is delivered by internal leadership, department heads, in collaboration with equipment manufacturers, to ensure technical depth and relevance. This collaborative learning model promotes effective knowledge transfer, especially in specialised areas such as radiology and laboratory operations, enhancing the service quality and patient care.

1,300

Employees as on 31 March 2025

Information Technology

The Company leverages advanced Information Technology (IT) systems to enhance patient care, streamline operations and uphold stringent data security standards. Its IT infrastructure is built to support the specific demands of its operations while enabling business growth and ensuring the consistency and reliability of day to day activities.

The front-end IT systems standardise processes, reduce human error through automation and enable real-time monitoring of technical operations. Additionally, various back-end solutions ensure seamless integration of IT infrastructure, enabling efficient management of operations.

Internal Control System and their Adequacy

The Company has established a comprehensive and robust internal control system that is tailored to its size, complexity and operational requirements. These controls are designed to safeguard assets, ensure operational efficiency and guarantee compliance with applicable laws and regulations. The internal control framework encompasses both financial and operational controls, aimed at maintaining the accuracy of financial reporting and preventing unauthorised use or loss of assets.

To evaluate the effectiveness of the internal control system, the Company regularly conducts audits across its business units and key operations. This includes assessments by the internal audit department. The findings from these audits are reported to the Audit Committee, which reviews the results and takes necessary actions to address any identified gaps or weaknesses. Recommendations for improvement are promptly acted upon to enhance the control environment. The Company is committed to continuously improving its internal control systems to mitigate risks, optimise business processes and align with industry best practices.

Cautionary Statement

Certain statements in the Management Discussion and Analysis section relating to the Companys objectives, projections, estimates, expectations and future outlook may constitute forward looking statements, as defined under applicable laws and regulations. These statements are based on currently available information, assumptions and forecasts and involve known and unknown risks and uncertainties that may cause actual results, performance, or achievements to differ materially from those expressed or implied. Factors that may impact the Companys operations include changes in macroeconomic conditions, fiscal and monetary policies, competitive intensity, regulatory developments, political and economic changes in India and globally, legal proceedings and technological advancements, among others. The Company makes no assurance of future performance and advises readers not to place undue reliance on forward looking statements. The Company undertakes no obligation to publicly update or revise any such statements in light of future events or new information, except as required by applicable law.